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The Great Rotation: Balancing AI Growth and Defensive Value · The SPY Trader

• 0:00
  Good morning and a very warm welcome to Spy Trader .
• 0:03
  I am your host , Sunny Day , and I am so glad you could join me this morning .
• 0:08
  It is 6 am on Sunday , August 9th , 2026 , in the Pacific time zone .
• 0:15
  We have a lot to unpack as we prepare for the trading week ahead .
• 0:19
  Currently , the market is in a bit of a highstakes consolidation phase .
• 0:24
  While we saw the S&P 500 , often tracked by the SPY ETF , and the Dow Jones hitting fresh record highs last week , the techfocused Nasdaq100 , or the QQQ , is still sitting slightly below its peaks .
• 0:39
  What we are seeing is a classic rotation where investors are moving money out of those giant tech stocks and into value and defensive sectors .
• 0:48
  The big theme for this coming week is waitandsee .
• 0:52
  Everyone is looking toward Wednesday and Thursday for the Consumer Price Index and Producer Price Index reports .
• 0:59
  Markets are expecting the Core CPI to settle around 2.4 percent .
• 1:04
  This cooling trend is exactly what the Federal Reserve wants to see .
• 1:08
  We also had some surprising news from the labor market on Friday , with nonfarm payrolls showing a loss of 23,000 jobs when the market was expecting a gain of 85,000 .
• 1:21
  Because of that big miss , the chance of a rate hike in September has dropped significantly to about 42 percent .
• 1:28
  If we get a cool inflation report this week , it might take a rate hike off the table entirely .
• 1:34
  This shift is providing a nice boost for the iShares 20 plus Year Treasury Bond ETF , also known as TLT .
• 1:42
  In other good news , geopolitical tensions are easing .
• 1:46
  There is talk of a shipping agreement between Iran and Oman , which has helped lower oil prices .
• 1:52
  WTI Crude fell 9 percent to 77 dollars a barrel last week , and that should help keep overall inflation in check .
• 2:01
  Looking at different sectors , Financials and Health Care are the big winners of this rotation trade .
• 2:07
  The Financial Select Sector SPDR Fund , or XLF , hit a fresh alltime high of 57 dollars and 33 cents , helped by gains in fintech names like Coinbase and PayPal .
• 2:20
  The Health Care sector , represented by XLV , also hit record highs at 167 dollars and 26 cents as folks look for safer places to put their money .
• 2:31
  Tech is still a bit of a roller coaster .
• 2:33
  Companies that can show they are actually making money from AI , like Palantir , are doing great .
• 2:39
  Palantir , ticker PLTR , jumped nearly 30 percent last week .
• 2:45
  However , companies just spending on infrastructure are being watched much more closely .
• 2:50
  We have some major earnings reports this week too .
• 2:53
  Supermicro , or SMCI , reports on Tuesday .
• 2:58
  They have a massive 60 billion dollar order backlog and are expecting their margins to double , so that will be a huge test for the AI industry .
• 3:07
  Then there is SpaceX.
• 3:08
  Since its IPO in June 2026 , it has had a bit of a bumpy ride .
• 3:14
  Even though they beat revenue expectations , their stock dropped because of a 16 billion dollar bill for AI infrastructure and their first insider lockup expiration .
• 3:25
  However , Nvidia got a boost because Elon Musk confirmed SpaceX will use Nvidia's Vera Rubin architecture exclusively .
• 3:33
  Interestingly , Nvidia is actually lagging behind the S&P 500 this year , which might make it a candidate for a catchup rally soon .
• 3:42
  Also , keep an eye on Apple this Monday .
• 3:46
  It is the record date for their 27cent dividend , which usually provides some price support .
• 3:52
  Now , let's talk about what you might want to do with your portfolio .
• 3:56
  For a moderate approach , it is generally a good idea to hold onto your broad market funds like SPY or VOO .
• 4:03
  They are at record highs for a reason , supported by strong earnings , but do expect some wobbles around Wednesday's inflation data .
• 4:12
  If you want something more defensive , consider moving a bit into the Health Care ETF , XLV .
• 4:19
  It has a low beta , meaning it does not swing as wildly as the rest of the market .
• 4:24
  For those of you looking for growth , you might want to buy the dip on Nvidia .
• 4:29
  That exclusive SpaceX contract really shows how strong their position is in the AI world .
• 4:35
  Just keep an eye on Supermicro after they report on Tuesday .
• 4:39
  If they confirm those high margins , it could be a very big move , but it is okay to wait for the official numbers first .
• 4:47
  Finally , for income and stability , you might want to scale into TLT .
• 4:51
  With the job market slowing down and yields looking like they have peaked , longterm treasuries can act as a nice hedge .
• 4:58
  On the flip side , I would suggest avoiding gold or GLD for the short term .
• 5:03
  As things calm down globally , that fear factor that drives gold prices higher is starting to disappear .
• 5:11
  So , the game plan for the week is to be cautiously bullish .
• 5:14
  Use the strength early in the week to trim back on some tech names that might have run too far , and maybe look toward those financial or health care sectors .
• 5:23
  Watch that Wednesday inflation data closely , as it might give us a great entry point for the QQQ if the numbers look good .
• 5:31
  That is all for this edition of Spy Trader .
• 5:33
  I am Sunny Day , wishing you a wonderful Sunday and a very successful week of trading ahead !